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TMI Blog2004 (11) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... essee was accepted by the Commissioner of Income-tax (Appeals) for the assessment year 1976-77 as well as by the Income-tax Appellate Tribunal. The controversy in the present case centres round the question of the number of workers employed in the manufacturing process carried on by the industrial undertaking. Section 80J(4) of the Act reads as under: "(4) This section applies to any industrial undertaking which fulfils all the following conditions, namely: (i) it is not formed by the splitting up, or the reconstruction, of a business already in existence; (ii) it is not formed by the transfer to a new business of machinery or plant previously used for any purpose; (iii) it manufactures or produces articles, or operates one or more cold storage plant or plants, in any part of India, and has begun or begins to manufacture or produce articles or to operate such plant or plants, at any time within the period of thirty-three years next following the 1st day of April, 1948, or such further period as the Central Government may, by notification in the Official Gazette, specify with reference to any particular industrial undertaking; (iv) in a case where the industrial undertaking ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y offering tax incentives within a period of 13 years from April 1, 1948. The section is an exemption section. After the country has gained independence in 1947 it is most essential to give a fillip to trade industries from all quarters. That seems to be the background for insertion of section 15C of the Act, which corresponds to section 80J of the Act. At the juncture it is desirable to notice the findings recorded by the Tribunal, relevant to the issue involved in the present reference. Repelling the contention of the departmental representative the Tribunal found that the rice mill business is a seasonal business and, therefore, it is not necessary that all the workers should have been engaged or employed throughout the year. After taking into consideration the trading and profit and loss account for the year ended March 31, 1997, the Tribunal found that payments were made to the hulling labourers, chaukidar, mistri, helpers and munims. It found that all these persons are employed in the manufacturing process. The books of account also show details of persons who were engaged as palledar, hulling labour, bhoosi hatwai, fataknewala (women labour and paddy dryer). It has come to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile construing sections 80HH and 80J of the Act. Learned counsel for the assessee submitted that in the absence of any definition of the word "worker" under the Income-tax Act, the court has to take its ordinary meaning, which may mean casual, permanent or temporary. Reliance was placed upon CIT v. K.G. Yediyurappa and Co. [1985] 152 ITR 152 (Karn) in support of the contention that the worker should include casual, permanent or temporary workers. Further reliance was placed upon CIT v. Harit Synthetics Fabrics P. Ltd. [1986] 162 ITR 640 (Bom). The Bombay High Court in the case has held that it is not requisite that a new industrial undertaking should have employed ten or more workers throughout the entire period in which relief was claimed. A reading of the provision requires that in order to qualify for the relief and satisfy the requirement, the undertaking must have employed ten or more workers substantially during the period in which relief was claimed. The theory of substantial compliance of the provision of section 80J(4)(iv) of the Act was propounded in this case. The aforesaid judgment has been followed by the Bombay High Court in its subsequent judgment reported in CIT v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the raw material into finished goods. The work of ten or more persons employed in the manufacturing process should be integrally connected with the manufacturing of rice. Their work should be reasonably connected with and be part of the manufacturing process of rice. The Income-tax Officer while holding that only two or three persons are required to run an automatic rice plant has interpreted the words "manufacturing process in a very narrow manner". The manufacturing process includes within its ambit that the raw material to be filled in the plant in such a shape and condition, which may be acceptable or can be fed in the plant. In the case of rice mill the palledars are required to bring paddy from the store or godown to the starting point of the plant. Drying of paddy is also necessary, as found by the Tribunal before putting the paddy in the plant. The workers are also required to clean the plant and remove bhoosi, husk, etc. The assessee claimed that the manufacturing process started after the point of purchase of paddy. Paddy is cleaned and dried and thereafter brought and put into the machine. The rice comes out of the machine along with broken rice thereafter. There is furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the statute to effectuate the legislative intention. It is equally settled law that, if the language is plain and unambiguous one can only look fairly at the language used and interpret it to give effect to the legislative intention. Nevertheless tax laws have to be interpreted reasonably and in consonance with justice adopting purposive approach. The contextual meaning has to be ascertained and given effect to. A provision for deduction, exemption or relief should be construed reasonably and in favour of the assessee." It is said that a statute is best understood if we know the reason for it. The reason for a statute is the safest guide to its interpretation. The words of a statute take their colour from the reason for it. No provision in the statute and no word of the statute may be construed in isolation. Every provision and every word must be looked at generally before any provision or word is attempted to be construed. The setting and pattern are important. In Poppatlal Shah v. State of Madras [1953] 4 STC 188; AIR 1953 SC 274, the apex court has observed as follows: "It is a settled rule of construction that to ascertain the legislative intent, all the constituent part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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